Many businesses begin behind an owner’s entrepreneurial drive, typically related to a specific skillset that makes them highly confident that they can maximize their opportunity through self-employment. They start their business because they are passionate, hard working, and dedicated. But you’ve probably seen the statistics. According to the U.S. Bureau of Labor Statistics, half of all businesses will fail within 5 years1.
The major culprit? Time. In our experience, far too many business owners get stuck “working in” their business, instead of finding and creating the time to “work on” the business.
In this 6-part series, we want to address some basic pitfalls that we have seen as financial planners for business owners and how we can help them plan accordingly. The reality is, what may make a business great at the onset (drive, skillset, confidence) can also be its downfall; an inability to adapt, to delegate, to plan ahead, to raise or properly allocate capital and ultimately find work-life balance.
The easiest way to be sure your business is being “worked on” is to hire professional help to do that planning work with you.
- The “do-it-yourself” drive that helped start the business will not serve an owner well when it comes to the time required to manage the many financial issues created by that business.
- It’s not unlike a sports team hiring a head coach – someone needs to take the owner’s vision and be sure all the support specialists come together under one plan and roadmap.
Next, be sure you “work on” your business through annualized strategic planning.
- A strategic business plan is imperative for a start-up. But mature businesses need a plan to grow as well. This is where many businesses fail – they do not regularly assess strengths, weaknesses, opportunities and threats.
- In failing to do so, they get too focused on the day to day operations, and not on the “big picture” steps for growth, the key metrics they need to track, or the hurdles that they need to address to move forward.
Next, many business owners “working in” their businesses forget about their own balance sheet.
- While you work hard for your business, be sure the business is working hard for you too.
- You need to focus on your own wealth planning, which means setting personal goals, managing taxes and risk and making investments in something outside of your business too.
Finally, we will discuss the importance of having a succession plan.
- Not only is it an important to document to what end you will be “in the business” for your own wealth plan, but also it’s your obligation to your family, your employees, your customers/clients, your vendors/suppliers and your financers.
- A business cannot maximize its value if it does not have a continuity plan or is too dependent on the works of one individual (i.e. you).
In summary, no business owner wants to work 12- hours day, 7 days a week forever. Finding a work-life balance can only come from remembering to continually “work on” the business too, and that probably means exercising your right as boss to delegate and get some outside guidance along the way.
Securities offered through LPL Financial, Member FINRA and SIPC. Investment advice offered through U.S. Financial Advisors, a registered investment advisor. U.S. Financial Advisors and Haas Financial Group are separate entities from LPL Financial.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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